AA+ credit rating confirmed
Tasmania has moved from seventh to fourth place in a ranking of State and Territory economies and has had its AA+ credit rating reaffirmed by international rating agency, Standard and Poor’s.
“We consider the State of Tasmania has very strong financial management, a strong economy, exceptional liquidity, and low contingent liabilities,” Standard and Poor’s said.
The agency described the State's outlook as "stable" and respected economist Saul Eslake told The Mercury: "In a relative sense, our employment position is improving."
He said the trend unemployment rate of 6.4 per cent was now lower than rates in Western Australia and South Australia and this had been noted in the latest CommSec State of the States report.
"It's better news than we normally get from the CommSec series," Mr Eslake said.
Tasmania's population growth has improved and the State is doing better than the national average in export and retail growth.
In December, Mr Eslake had warned of underlying issues in the economic structure.
Delivering the Tasmanian Chamber of Commerce and Industry’s second Tasmania Report, Mr Eslake said Tasmanians were poorer on average than other Australians, mainly because of the lack of net employment growth since the Global Financial Crisis in 2008.
"The average Tasmanian household income is $43,600, which is a whopping 32 per cent below the national average," he said.
"Regional Tasmanians have been especially hard hit by the decline in manufacturing since the GFC which, by some yardsticks, has been more pronounced in Tasmania than in South Australia ... as well as by the long-term decline of industries such as forestry."
Mr Eslake said the north and north-west had shown great resilience, while transformation programs planned by the University of Tasmania in Launceston and Burnie could amount to game-changers.
He said Hobart was heading in the right direction in many economic areas, including real estate.
He attributed the State's lower-than-expected growth rate of 1.3 per cent largely to downturns in three sectors: agriculture; energy; and manufacturing.
"All were almost certainly caused by a combination of droughts and floods and the Basslink cable [outage]," Mr Eslake said.
In summary, he said the State was being held back by:
- An employment participation gap – only 46.2 per cent of the population was employed, 3.4 per cent below the national average.
- An hours-worked gap – Tasmanians workers were averaging 30.7 hours a week, 1.5 hrs less than the national average (equivalent to the loss of 12 days a year).
- A productivity gap – Tasmanian workers are producing $15 (or 18 per cent) less per hour than the Australian average.
Meanwhile, the State Treasury reported that Tasmania was leading the nation in five of 17 economic measures monitored by the Australian Bureau of Statistics, but was lagging elsewhere.
The State’s annual performances on retail sales and car sales have been much stronger than national results and export growth has been far ahead of the national average.
Tasmanian wages have grown faster, recently, than those in other Australian jurisdictions.
The State is also a touch ahead of the nation on State Final Demand growth, which adds household and government consumption to private and government spending on assets.
A series of monthly retail turnover records has been set in Tasmania in recent times, with monthly turnover topping $500 million for the first time.
October retail figures came out after the Treasury analysis, showing 3.9 per cent annual growth, compared to 3.4 per cent nationally.
The dollar value of Tasmanian merchandise exports increased by 8.7 per cent in the year to the end of September, while Australia’s export value dropped by 4.8 per cent.
Tasmania’s population growth rate was 0.4 per cent in the year to the end of March, lagging behind the national rate of 1.4 per cent.
Investment in tourism infrastructure is rising much more quickly in Tasmania than the national average and should deliver significant employment in the future.
A State Government report on tourism released in December showed:
- A 4 per cent increase in visitor numbers to 1.19 million people;
- An 8 per cent increase in visitor spending to $2.07 billion;
- 74 per cent of visitors recommending Tasmania to others — the highest percentage in the nation; and
- More than $500 million planned in tourism investment.
In January, a Deloitte Access Economics report confirmed that Tasmania's economy was "doing OK", but noted a recent reduction in fulltime jobs and population growth that was weaker than the national average.
Then MyState’s latest economic update reported that the economy had reached new heights, with retail and tourism driving jobs growth, especially in the second half of last year.
Mr Gutwein said: "This is the fifth report in a matter of weeks to highlight positive signs in the economy."
There was still more to come: an Office Market Report by the Property Council of Tasmania showed that demand for office space was continuing to grow despite a flow of new accommodation, while vacancy rates were the third lowest in the country, behind only Melbourne and Sydney.
The Premier, Will Hodgman, was especially encouraged by Standard and Poor’s rating decision.
"This is the second-highest rating available under Standard and Poor’s system and sees Tasmania ranked higher than Western Australia and South Australia and on par with Queensland," Mr Hodgman said.
"The main reason for the credit rating is the fact that the Hodgman Government has balanced the Budget for the first time in years.
"Our spending is under control and while revenue is tight, we are investing in the areas that matter: health; education; and protecting the vulnerable."
The Australian Government also avoided a ratings down-grade in December.
Canberra issued a Mid-Year Economic and Fiscal Outlook which the Tasmanian Treasurer, Peter Gutwein, described as "a steady-as-it-goes approach" to Tasmania.
Mr Gutwein said a projected $12.1 million reduction in GST distributions to the State over four years represented only a fraction of a percentage change.
"Pleasingly, the outlook confirms that the 2016 Federal election commitments are all funded, including the UTAS redevelopment in the north and north-west, the Regional Jobs and Investment Package, and the National Institute for Forest Products Innovation in Launceston," Mr Gutwein said.
Image courtesy of the ABC
8 February 2017, Edition 180